Welcome to another edition of the Car Dealership Guy Podcast Recap—a rundown of key lessons from top operators, founders, and execs shaping the future of auto retail.
Today’s guest is Alan Haig, President at Haig Partners.
We discuss why dealer profits fell 16% in the first quarter of 2026, yet the number of dealerships changing hands surged 39% over the same period last year.
Dealership M&A is up 39% even though profits are down, and there's a specific reason for both
The first quarter of 2026 was rough across almost every metric dealers care about, yet the number of dealerships that sold was up 39% from the same period last year.
"Because of those high profits, we're seeing a lot of M&A activity. The number of dealerships that sold in the first quarter of 2026 was up 39% from the dealerships that sold in the first quarter of last year."
Part of that spike, in his view, is a comparison effect: Q1 of 2025 was unusually quiet because late 2024 deal activity stalled while buyers and sellers waited to understand the post-election tax and regulatory picture.
Blue sky values are down, but the multiples themselves haven't moved much
The 4% decline in average blue sky since the end of 2025 tracks directly with the decline in earnings… less profit means less to buy, not a change in how the market values that profit.
"We took Volkswagen down from trading at a multiple of 3-4x times earnings to just a dollar value because I think their earnings have fallen so low at Volkswagen stores, unfortunately, that if somebody is buying a Volkswagen store, they're not paying three to four times their earnings."
On the other end, Buick GMC got a quiet upgrade this quarter, and GMC truck margins have separated enough from Chevrolet that the two brands are now valued comparably.
Stellantis and Nissan are the clearest value plays in the market right now
Both brands went through brutal stretches that scared off buyers and crushed dealer profits, and both are now in recovery mode with new products and management focused on dealer profitability.
"I say that Stellantis is the brand that suffered so much. I think there were, I can't even remember how many straight quarters of sales declines at Stellantis, and a lot of our friends who were making strong profits just saw them evaporate and they were so frustrated with the management there. That's changed significantly."
For buyers with a longer time horizon, the return potential on a Stellantis or Nissan store today is higher than it would be on a Toyota or Lexus, which is exactly why value-oriented buyers are looking at them.
Volkswagen's treatment of its dealer body is a cautionary tale for the whole industry
While VW has been investing its capital in Scout and Rivian (both direct-to-consumer models), the dealer body that's been struggling for decades has been getting little in the way of answers or accountability.
"There was a terrible dealer meeting at Las Vegas earlier this year at NADA. And I don't know if some of your other guests have even discussed that. It was, you know, kind of hush-hush and we're not going to reveal any confidential details, but a number of people said that they've never been to a worse dealer-supplier meeting in their decades of experience. That there just were no answers, there was no accountability, there were there was nothing really optimistic for the dealer base."
The broader principle, one Mike Jackson used to say at AutoNation, is that talent and capital in auto retail flow to where they can get the best return on investment, and right now that isn't Volkswagen.
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Dealers are spending more on tech but sales per salesperson hasn't moved in decades
AI investment across auto retail is real, but whether any of it is showing up in the bottom line is a different question entirely.
"I hear stories about people maybe they hire one less salesperson because they have a better chatbot that's responding than their previous chatbots were. But it's not obvious that it's shown up in better inventory ordering. But, you know, for years there's this belief that auto retail is kind of a 2.5% net to sales business."
Until that number moves, and it hasn't moved meaningfully despite years of tech stack investment, the honest answer is that there's a lot of hope and not much fire yet.
Reinsurance profits from F&I are becoming a meaningful chunk of total store profit
F&I income has been tracking the rising cost of vehicles, but the more interesting shift is how offshore dealer warranty companies are quietly changing the profit picture for well-run stores.
"The reinsurance profits that dealers are enjoying through F&I products are very significant compared to the total profits they're making per store. So, they often have an offshore dealer and warranty company where they're making several hundred thousand, perhaps a million dollars a year if it's a really good franchise, like a high volume Toyota store."
The tax treatment alone, aka capital gains rather than ordinary income, with the ability to borrow against the reserve, makes this a fundamentally different kind of asset than the front-end profits that show up on a financial statement.
Fixed ops is still strong, but the growth rate is slowing, and no one's sure why yet
For years, fixed operations delivered consistent quarter-over-quarter gains well above inflation—5, 8, even 11% at times. One quarter at roughly the inflation rate is a break from that pattern worth paying attention to.
"I think the average vehicle now is 13 years on our road. It's never been this high. But the fact that we're not out pacing inflation, that gives me a little cause for concern."
The open question is whether the structural tailwinds (aging fleet, rising repair costs, warranty volume) are still intact, or whether something has quietly shifted in the first quarter data.
The pipeline tells you where the market is headed 6 months before it gets there
Because the buy-sell process (from first meeting to OEM approval) takes roughly 6 months end-to-end, Haig Partners can read forward demand from current activity better than most market indicators can.
"We can kind of tell how active the future's going to be based upon our activity 6 months before. And it's a strong pipeline right now, really all across the country and almost all brands."
Right now, that pipeline includes eight Mercedes stores in different parts of the U.S., a Lexus opportunity, and a closing this month on two Toyota stores and two Honda stores, a mix that reflects both top-end demand and the volume of sellers coming to market across brand tiers.
Dealers who are worried about the future are selling, and dealers with confidence are buying from them
The buy-sell market right now is essentially a market for conviction, with sellers citing macro uncertainty and buyers seeing the same assets as attractively priced entry points.
"There are enough who say, 'Hey, I've dealt with all these other risks. I can deal with this.' And they're going to invest."
In 2009, Haig Partners closed practically zero deals because no one on either side of the market wanted to transact, and that's nowhere close to where things are today.
If you want to know whether it's the best or worst of times, watch what dealers are actually doing
Polls and surveys of dealer sentiment only go so far, which is why the more reliable signal is where capital is actually flowing.
"When I see what people are actually doing, they're investing capital and they want to grow up and down the quality stack from Lexus to Nissan. I think we're definitely in the best of times category."
Profits are down, the macro is uncertain, and specific brands are struggling, but dealers with options are choosing to stay in and buy more, which is the most honest read of the market available.
